A borrower has two alternatives for a loan: (1) issue a $630,000, 75-day, 6% note or (2) issue a $630,000, 75-day note that the creditor discounts at 6%. Assume a 360-day year. This information has been collected in the Microsoft Excel Online file. Open the spreadsheet, perform the required analysis, and input your answers in the questions below. < Open spreadsheet a. Compute the amount of the interest expense for each option. Round your answer to the nearest dollar. for each alternative. b. Determine the proceeds received by the borrower in each situation. Round your answers to the nearest dollar. (1) $630,000, 75-day, 6% interest-bearing note: $ (2) $630,000, 75-day note discounted at 6%: c. Alternative is more favorable to the borrower because the borrower
A borrower has two alternatives for a loan: (1) issue a $630,000, 75-day, 6% note or (2) issue a $630,000, 75-day note that the creditor discounts at 6%. Assume a 360-day year. This information has been collected in the Microsoft Excel Online file. Open the spreadsheet, perform the required analysis, and input your answers in the questions below. < Open spreadsheet a. Compute the amount of the interest expense for each option. Round your answer to the nearest dollar. for each alternative. b. Determine the proceeds received by the borrower in each situation. Round your answers to the nearest dollar. (1) $630,000, 75-day, 6% interest-bearing note: $ (2) $630,000, 75-day note discounted at 6%: c. Alternative is more favorable to the borrower because the borrower
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Transcribed Image Text:A borrower has two alternatives for a loan: (1) issue a $630,000, 75-day, 6% note or (2) issue a $630,000, 75-day note that the creditor discounts at 6%. Assume a 360-day
year. This information has been collected in the Microsoft Excel Online file. Open the spreadsheet, perform the required analysis, and input your answers in the questions below.
X
Open spreadsheet
a. Compute the amount of the interest expense for each option. Round your answer to the nearest dollar.
for each alternative.
b. Determine the proceeds received by the borrower in each situation. Round your answers to the nearest dollar.
< (1) $630,000, 75-day, 6% interest-bearing note: $
(2) $630,000, 75-day note discounted at 6%: $
c. Alternative
is more favorable to the borrower because the borrower
Transcribed Image Text:Gmail <- YouTube
File
Du
A1
1
2
3
5
6
template - Saved V
7
8
Home
9
17
Insert
DATA
Number of days per year
Principal amount of note
10
Note interest rate
11 Note discount rate
12 Term of note, days
13
24
25
t
Draw
Arial
26
27
28
29
30
31
A
B
Evaluating alternative notes
The data for two alternatives for a loan are provided in the table below.
G
Page Layout
X✓ fx Evaluating alternative notes
10
Workbook Statistics
= Data +
Formulas
C
OO
360
18
19
20
21 a. Amount of the interest expense for each alternative
22 b. Proceeds received by the borrower
23
B & Av
X
1-Nondiscounted
Note alternatives
$630,000
Data
6%
75
D
Review
2-Discounted
14 REQUIRED:
15 Determine the amount of interest for each alternative and determine the cash proceeds received by the borrower for each alternative.
16
Using formulas and cell references from the problem data, perform the required analysis. Formulas entered in the
green cells show in the orange cells. Transfer amounts to CNOWv2 for grading.
$630,000
6%
75
Search for tools, help, and more (Option + Q)
Help
Ev ab
View
12 A
19
E
F
Note alternatives
1-Nondiscounted 2-Discounted
General
Formulas
>
tv
G
$.00
.00
→.0
H
I
alı
2
K
+
A
L
M
Give Fee
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 4 steps
Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education